United Bank, Inc. v. Blosser, 32691.

• Citation: 624 S.E.2d 815
• Decision Date: 29 November 2005
• Docket Number: No. 32691.,32691.
• Parties: UNITED BANK, INC., As Trustee of the Albert M. Price Trust, Plaintiff Below, Appellee, v. Robert C. BLOSSER, et al., Defendants Below, Appellants.
• Court: Supreme Court of West Virginia

Page 815

624 S.E.2d 815

UNITED BANK, INC., As Trustee of the Albert M. Price Trust, Plaintiff Below, Appellee, v. Robert C. BLOSSER, et al., Defendants Below, Appellants.

No. 32691.

Supreme Court of Appeals of West Virginia.

Submitted: November 1, 2005.

Filed: November 29, 2005.

Syllabus by the Court

1. This Court's review of a trial court's decision on a motion to dismiss for improper venue is for abuse of discretion.

2. "A circuit court's entry of summary judgment is reviewed de novo." Syllabus point 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).

3. "Courts of record can speak only by their records, and what does not so appear does not exist in law." Syllabus point 3, Hudgins v. Crowder & Freeman, Inc., 156 W.Va. 111, 191 S.E.2d 443 (1972).

4. A trust that is created to provide educational scholarships to an indefinite class of beneficiaries, but which also contains a preference for certain family members of the grantor, is a valid charitable trust pursuant to W. Va.Code § 35-2-1 (1923) (Repl.Vol.2005), and is exempt from the application of the rule against perpetuities.

Mark W. Kelley, Christopher J. Winton, Ray, Winton & Kelley, PLLC, Timothy A. Bradford, Bradford Law Offices, Charleston, for the Appellants.

Bruce L. Stout, Scott K. Sheets, Cindy D. McCarty, Huddleston Bolen LLP, Huntington, for the Appellees.

Justice DAVIS delivered the Opinion of the Court.

Justice BENJAMIN, deeming himself disqualified, did not participate in the decision of this case.

Judge ARTHUR M. RECHT sitting by temporary assignment.

DAVIS, Justice.

This appeal arises from a declaratory judgment action involving a certain trust that was established by Dr. Albert M. Price, deceased. In this appeal, distant relatives of Dr. Price, Kenneth N. Dickens and Richard R. Lambert, Jr. (hereinafter referred to as "Dickens and Lambert"),¹ defendants below, and appellants herein, challenge various decisions made by the Circuit Court of Wood County. Most significantly, Dickens and Lambert challenge the circuit court's decisions that venue was proper in Wood County, and that the trustee of Dr. Price's trust had acted properly in removing a family preference from the trust. After considering the parties' briefs and oral arguments, the record submitted on appeal, and the pertinent authorities, we conclude that, because the record contains evidence supporting venue in Wood County, and no evidence to the contrary, the circuit court's ruling in this respect will be affirmed. Furthermore, we find that the trustee properly removed the family preference from the trust.

I. FACTUAL AND PROCEDURAL HISTORY

Dr. Albert M. Price was an optometrist who practiced for many years in Boone County, West Virginia. In 1957, Dr. Price, who was never married and had no children, established a revocable trust to first benefit his sisters, and to later provide college scholarships. According to the 1957 Trust document, the income generated by the Trust was to be distributed to Dr. Price's sisters during their lifetimes and, upon the death of the last surviving sister, the Trust was to be held and administered for charitable and educational purposes. Specifically, section IV(2) of the Trust expressly directed that

[i]f there are no sisters surviving Grantor or upon the later death of the last surviving sister of Grantor, Trustee shall hold and administer the Trust Estate as a charitable trust for exclusively charitable and educational purposes. Trustee shall use and distribute the net income from the Trust Estate within its sole discretion for scholarship purposes, and it is Grantor's wish that the Trustee will grant scholarships to or otherwise aid needy and worthy boys and girls who wish to attend Wilson Junior College at Swannanoa, North Carolina (formerly known as Asheville Farm School). Grantor hopes that students residing in West Virginia will be given preference....

The Trust document further stated, at section IV(4), that "[t]his trust shall be a perpetual charitable trust...." Kanawha Banking and Trust (hereinafter referred to as "KB & T") was named as trustee.

In January, 1969, Dr. Price and KB & T entered a "SUPPLEMENTAL AGREEMENT OF TRUST," wherein certain provisions of the 1957 Trust were amended. Relevant to the instant action, Section IV(2) of the Trust was amended to state, in pertinent part:

If there are no sisters surviving Grantor or upon the later death of the last surviving sister of Grantor, the Trustee shall use and distribute the net income in the form of annual scholarships to worthy boys and girls who are keenly interested in and capable of taking advantage of an opportunity for a college education. Said scholarships shall be awarded under reasonable rules and regulations to be prescribed by the Trustee, except that first priority and consideration shall be given to qualified blood relatives of the Grantor, regardless of the place of their residence, second consideration shall be given to qualified boys and girls residing in Boone County, West Virginia, and third consideration shall be given to qualified boys and girls residing in the other fifty-four counties of West Virginia....

Dr. Price died in November, 1976. Prior to his death, Dr. Price had executed a pourover will whereby his residuary estate, which was comprised of the bulk of his estate, would pass into the 1957 Trust, as amended in 1969 (hereinafter referred to as the 1957 Amended Trust). KB & T was named executor of Dr. Price's estate. Due to the Tax Reform Act of 1969, the portion of Dr. Price's estate that was designated to pour-over into the 1957 Amended Trust would not qualify for the federal estate tax charitable deduction as the Trust no longer qualified as a charitable trust, in part, because of the provision giving preference to Dr. Price's relatives in the award of scholarships.² Accordingly, in December, 1977, KB & T, as executor of Dr. Price's estate, filed a declaratory judgment action in the Circuit Court of Boone County seeking to determine whether Dr. Price's will could be reformed so his estate would qualify for the federal estate tax charitable deduction. In it's complaint, KB & T proposed that the tax results sought by Dr. Price could be obtained without sacrificing his other testamentary purposes by creating a second trust "similar in all respects to the 1957 [Amended] trust except for those changes which are needed to qualify the second trust as a charitable unitrust under applicable provisions of the Internal Revenue Code."³ The second Trust would differ from the 1957 Amended Trust in that it would not contain a preference for Dr. Price's blood relatives.⁴ KB & T explained in it's complaint, however, that Dr. Price's blood relatives could be favored in the awarding of scholarships from the 1957 [Amended] Trust. The Circuit Court of Boone County granted the relief sought by KB & T. In addition to approving the creation of a second trust, the Circuit Court of Boone County commented:

Under the terms of the 1957 [Amended] trust, the trustee is directed to make a preference in the awarding of scholarships to the blood relatives of Albert M. Price. Under the terms of the 1969 Tax Reform Act, a settlor of a qualified charitable unitrust cannot provide for the awarding of preferential treatment to his descendants. Accordingly, plaintiff's proposed second trust does not provide for a preference for the blood relatives of Albert M. Price but rather requires that they compete equally with all other candidates for the scholarships. As was stated earlier, the 1957 [Amended] trust will not be changed if the plaintiff's prayer for relief is granted, and accordingly, the trustee of the 1957 trust is free to make such preferential awarding of scholarships from the 1957 trust to the blood relatives of Albert M. Price as the trustee shall deem appropriate.

In 1986, United Bank, Inc., plaintiff below, Appellee (hereinafter referred to as "United Bank"), acquired KB & T and became trustee of both the 1957 Amended Trust and the second Trust (hereinafter referred to as "the 1978 Trust").⁵ Thereafter, in August 1988 Dr. Price's last surviving sister died and the scholarship phases of the 1957 Amended Trust and the 1978 Trust began. The 1957 Trust did not qualify as a charitable trust due to the preference for blood relatives contained therein. Accordingly, United Bank cleansed the 1957 Amended Trust pursuant to W. Va.Code § 35-2-9 (1971) (Repl.Vol.2005), thereby removing the preference for blood relatives by deeming it a charitable trust and altering it accordingly. Because the 1957 Amended Trust, as cleansed in 1988, was now substantially the same as the 1978 Trust, United Bank combined the corpus of the two trusts (the combined trust will hereinafter be referred to as "the Price Trust").

In 2003, distant relatives of Dr. Price questioned United Bank regarding its administration of the 1957 Amended Trust, particularly its removal of the preference for blood relatives of Dr. Price in the award of scholarships. Thereafter, in July 2003, United Bank filed a Petition and an Amended Petition for Declaratory Judgment in the Circuit Court of Wood County, seeking a declaration that it had properly construed and administered the 1957 Amended Trust. United Bank named as defendants in the declaratory judgment action various relatives of Dr. Price, including appellants Dickens and Lambert. United Bank filed the action in Wood County based upon its claim that it administers the Trust from its Wood County headquarters, and that it also maintains the trust res from that location.

In September, 2003, Dickens and Lambert, along with other of the respondents to the Wood Count action, filed a motion to dismiss on grounds of improper venue in Wood County. Dickens and Lambert then filed their own complaint in the Circuit Court of Boone County, in October 2003, on behalf of themselves and those similarly situated. The complaint alleged various torts, including claims...